South Korea’s Ministry of Economy and Finance will begin testing blockchain-based deposit tokens for public spending in the fourth quarter as part of a broader push to modernize how public funds are managed.
The ministry said the pilot project to use treasury funds as digital currency was approved under a 2026 regulatory sandbox program, local media reported.
The approval enables the payment of business promotion expenses, which are currently processed with public procurement cards, using tokenized deposits.
The change reverses a long-standing system governed by the Treasury Funds Management Act that required card-based payments. In the sandbox environment, agencies will be able to operate outside these rules to a limited extent to test new methods.
Officials expect the change to improve oversight. Token-based payments can be programmed with predefined conditions, including restrictions on when funds can be used and which industries can accept them. This can reduce the need for manual audits, especially when the expenditure occurs outside of normal business hours.
The system also removes intermediaries such as card networks, which the ministry says can lower transaction fees for small businesses receiving government payments.
This marks the second use of deposit tokens in Treasury operations, following a previous pilot linked to subsidies for electric vehicle charging.
The trial will take place in Sejong City following a selection process for participating firms, the report said. The ministry plans to expand the program if it shows stronger control over spending and measurable cost savings.
